New Zealand rejects capital gains tax

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

New Zealand rejects capital gains tax

Sponsored by

sponsored-firms-russel-mcveagh.png
AdobeStock_114647190_Reject

New Zealand's government has rejected the recommendation of its tax working group (TWG) that New Zealand introduce a capital gains tax (CGT). Announcing the government's decision, Prime Minister Jacinda Ardern acknowledged that while she personally saw merit in introducing a CGT, there was no mandate to proceed with introducing a CGT.

The TWG was set up by the government shortly after it took office in late 2017 to make recommendations on the fairness, balance and structure of the tax system.

While the CGT was the most significant of the TWG's recommendations, the group's final report included numerous other recommended changes to the tax system, and the government has indicated it will consider including a number of those other recommendations on its tax policy work programme.

The Prime Minister also reiterated that the government would soon release a consultation paper on a digital services tax.

Capital gains tax rejected

The decision not to implement a comprehensive CGT is not unexpected. The junior coalition partner in the government (the New Zealand First Party), whose support would have been required to implement a CGT, had previously voiced its opposition to a CGT. The opposition National Party had also vowed to repeal a CGT if it were enacted.

In rejecting the CGT recommendations, Prime Minister Ardern stated: "It's time to accept that not only has a government that reflects the majority of New Zealanders not been able to find support for this proposal, feedback suggests there is also a lack of mandate among New Zealanders for such a tax also".

She also ruled out a CGT under her leadership in future.

Refreshed tax policy work programme

A refreshed tax policy work programme will be released mid-year. The government is considering the following as high priority for inclusion:

  • The TWG's recommendations regarding a regime that encourages investment in nationally-significant infrastructure projects;

  • Allowing depreciation for the costs of seismic strengthening of buildings;

  • A review of tax loss trading (potentially in tandem with a review of the loss carry-forward rules for companies); and

  • Strengthening the enforcement of the rules for closely held companies.

Prime Minister Ardern also stated that following the group's recommendations, "the coalition government has agreed to tighten rules around land speculation and work on ways to counter land banking".

New Zealand has a benign tax regime for property investors and speculators that are perceived to have contributed to increasing house prices.

Such investments are not subject to stamp duty or similar transaction taxes, and in many cases, gains on disposal would be a non-taxable capital gain.

As a starting point, the government has directed the Productivity Commission to consider vacant land taxes as part of its review of local government body financing.

Digital services tax consultation

While the TWG did not recommend specific international tax changes, it did note its support for "New Zealand's continued participation at the OECD", and recommended that "the government stand ready to implement a digital services tax if a critical mass of other countries move in that direction".

The government had already acted on that recommendation by announcing, prior to the release of the group's recommendations that New Zealand will proceed with a digital services tax, with a public consultation on "options for introducing a digital services tax" to start soon.

more across site & shared bottom lb ros

More from across our site

The senior hire builds on the firm’s status as the joint most prolific US hirer in 2024; in other news, an ex-IRS chief counsel has joined Miller & Chevalier
Probationary workers at the agency are being cut, according to reports, with mass firings already taking place across the US
The change is understood to include enhancing information comparison
Taxpayers that operate internationally need to be better prepared for increased tax and TP scrutiny, one expert tells ITR
The Singapore boutique tax law firm’s chief told ITR of the ex-Baker McKenzie lawyers playing a role in the initiative as well as its desire to expand geographically
The new tax regime is a significant reform that will bolster India's semiconductor and electronics manufacturing ecosystem, says Khaitan & Co
Gavin Kliger, a DOGE software engineer, is reportedly set to work at the IRS for 120 days
The Royal Bank of Canada’s success over HMRC represents a milestone in the interpretation of double tax treaties, Norton Rose Fulbright partner Dominic Stuttaford said
Experts from African law firm Bowmans outline the challenges that companies operating across the continent face to stay tax compliant amid legislative upheaval and US pressure
The OECD said the EU nation relies too heavily on corporate tax from multinationals; in other news, Squire Patton Boggs, Skadden and KPMG all made senior tax appointments
Gift this article